Red Cross Deficits Climb as Donations Fall

February 15, 2016

The American Red Cross ran a deficit of $159 million during its most recently completed fiscal year, in part because of a steep decline in fundraising revenue, ProPublica reports.

According to newly released financial statements for the fiscal year ending June 30, 2015, donations to the Red Cross over the previous twelve months totaled $604 million, about $120 million less than in FY2014 and the worst fundraising results the Red Cross has reported since at least 2000. While the relief organization's fundraising often spikes following a major disaster and drops significantly in years without one, that was not the case in 2014-15. The drop in revenue was due in part to a decline in contributions from the United Way and other federated campaigns, which in total fell from $104 million in 2014 to $77 million. A United Way spokesperson told ProPublica it has cut contributions to the Red Cross in recent years as it shifts to a "community impact funding model."

In a letter to Rep. Bennie Thompson (D-MS) in January, Red Cross CEO Gail McGovern said she had presided over "Turnaround I" after inheriting financial problems at the charity in 2008 and is now in the midst of "Turnaround II" as a result of a nationwide drop in the demand for blood products. The charity's large blood banking division — which has been struggling amid industry-wide declines and other issues — lost $71 million in fiscal year 2015.

McGovern also wrote that the organization's fundraising results are improving and noted that "if fundraising from major disasters is excluded, we have increased financial donations from individual, corporate, and foundation donors by 14 percent since 2008." According to ProPublica, it is unclear how the Red Cross arrived at that figure.